Is Social Security Taxable in Michigan? State Exemption and Federal Tax

Social Security is not taxable in Michigan. The state fully subtracts every dollar of Social Security retirement, disability, and survivor benefits from your taxable income, regardless of your age or how much you earn.¹ The federal government is the part to watch. Depending on your combined income, the IRS can tax up to 85 percent of your benefits.²

Michigan’s Full Exemption

Michigan Compiled Laws Section 206.30(1)(f)(iii) lets you subtract all Social Security benefits from your state taxable income. The statute defines those benefits by reference to Section 86 of the Internal Revenue Code, so retirement, SSDI, and survivor benefits are all covered.¹ Whatever portion of your Social Security ends up in your federal adjusted gross income comes back out before Michigan applies its 4.25 percent flat rate.³

The subtraction has no age requirement, no income cap, and no phase-out. A 62-year-old collecting early benefits and an 85-year-old drawing the maximum both remove the full amount. Six-figure household income doesn’t change it either. The age brackets and dollar caps you may have read about in Michigan tax law apply to pensions, 401(k) distributions, and similar retirement income, not to Social Security.

To claim the subtraction, use Michigan Schedule 1 (Additions and Subtractions). Your Michigan return starts from your federal adjusted gross income, which may include a taxable portion of your Social Security. You enter your total benefits on the designated subtraction line of Schedule 1, and that amount comes out before the figure flows into your MI-1040.¹ The SSA-1099 you receive each January shows the total benefits paid and any federal tax withheld — that’s the figure to work from.

A 2026 Change for Retirees 67 and Older

Public Act 24 of 2025 fixed a wrinkle for certain retirees. Before this law, if you were born after 1952, had reached age 67, and claimed Michigan’s standard deduction, you had to reduce that standard deduction by the amount of your Social Security subtraction. Claiming one benefit partially wiped out the other.⁴

For tax years 2026 through 2028, that offset is gone. If you were born after 1952 and are at least 67, you claim both the full standard deduction and the full Social Security subtraction with no reduction. Taxpayers born before 1953 were never subject to the offset, so nothing changes for them. The relief also doesn’t apply if you choose to deduct pension or retirement benefits instead of taking the standard deduction.⁴

What the Federal Government Can Tax

The IRS decides how much of your Social Security is taxable using a formula built around “combined income.” That figure is your adjusted gross income, plus any tax-exempt interest (such as municipal bond income), plus half of your Social Security benefits.⁵

Where your combined income lands determines the outcome:

Single, head of household, or qualifying surviving spouse: below $25,000, none of your benefits are taxed. Between $25,000 and $34,000, up to 50 percent are taxable. Above $34,000, up to 85 percent are taxable.²
Married filing jointly: below $32,000, no tax on benefits. Between $32,000 and $44,000, up to 50 percent are taxable. Above $44,000, up to 85 percent are taxable.²
Married filing separately and lived with your spouse at any time during the year: the base amount is $0, so up to 85 percent of benefits can be taxed from the first dollar of combined income.⁶

“Up to 85 percent taxable” is a common source of confusion. It doesn’t mean 85 percent of your benefits leaves as tax. It means 85 percent of your benefits gets added to your taxable income and taxed at your regular federal rate. Someone in the 22 percent bracket with 85 percent of benefits included pays roughly 18.7 percent of those benefits in federal tax, not 85 percent.

The thresholds are written into the statute as fixed dollar figures and aren’t adjusted for inflation. They’ve stayed put since the current formula took effect, which means more retirees cross them each year as cost-of-living adjustments raise benefit amounts.²

Paying the Federal Tax You Owe

If your combined income is high enough to trigger federal tax on your benefits, you have two ways to stay current instead of facing a lump-sum bill in April.

Voluntary Withholding From the SSA

You can ask the Social Security Administration to withhold federal income tax straight from your monthly benefit. The available rates are 7, 10, 12, or 22 percent.⁷ You set it up, change it, or stop it through your my Social Security account or by calling the SSA at 1-800-772-1213. Don’t withhold Michigan state tax from Social Security — the state doesn’t tax it, so there’s nothing to withhold against.

Quarterly Estimated Payments

If SSA withholding doesn’t cover the full federal liability, quarterly estimated payments fill the gap. Federal due dates are April 15, June 15, September 15, and January 15 of the following year.⁸

For Michigan, estimated payments are required if you expect to owe more than $500 on your 2026 return. You can generally avoid a penalty if withholding and estimated payments cover at least 90 percent of your 2026 tax, or 100 percent of your 2025 tax (110 percent if your 2025 adjusted gross income exceeded $150,000).⁹ If Social Security is your only income, this Michigan requirement likely won’t apply since the state doesn’t count those benefits as taxable. If you also have pension or investment income, run the numbers.

Pensions and 401(k) Income Are a Different Question

One boundary worth naming. Michigan has been rolling back taxes on pensions, 401(k) distributions, and similar private retirement income through Public Act 4 of 2023, with a four-year phase-in that reaches full deduction status in the 2026 tax year.¹⁰ Those rules are separate from Social Security and don’t change how your benefits are treated. Social Security has always been fully exempt under its own subtraction in Michigan law. If you draw both Social Security and a pension, keep the two deductions separate on your return.

1
Michigan Legislature. Michigan Compiled Laws 206.30 – Taxable Income Defined
2
Office of the Law Revision Counsel. 26 USC 86 – Social Security and Tier 1 Railroad Retirement Benefits
3
Michigan Department of Treasury. 2026 Michigan Income Tax Withholding Guide
4
Michigan Department of Treasury. Notice Regarding Social Security Taxation Changes in Public Act 24 of 2025
5
Internal Revenue Service. Publication 915 – Social Security and Equivalent Railroad Retirement Benefits
6
Internal Revenue Service. Social Security Income
7
Social Security Administration. Request to Withhold Taxes
8
Internal Revenue Service. Individuals 2 – Estimated Tax
9
Michigan Department of Treasury. 2026 MI-1040ES – Michigan Estimated Income Tax for Individuals
10
Michigan Legislature. Enrolled House Bill 4001 – Public Act 4 of 2023